MAKING YOUR CASH FLOW!

CASE STUDY - CONSTRUCTION SERVICES COMPANY

   

SYNOPSIS

COMPANY

Construction Services Company
$2.4 Million in Sales | Regional Services Company

SITUATION

Bank cut off the line of credit and the business was losing money and the company was unable to pay bank and vendors. The company was less than two weeks away from shuttingn the doors. The bank was in the final stages of beginning the foreclosure process to liquidate the assets via auction. The owner retinaed a debtor attorney preparing to file Chapter 7 Bankruptcy. Vendors were upset and "the word" was on the street.

RESULT
  • Stabilized cash flow keeping business operational long enough to sell the "business continuation value" and secured assets.
  • Assemebled investor group willing to purchase the assets and worked with the bank to reach a suitable purchase price. 
  • Worked with the owner and debtor attorney to hold off Chapter 7 and enter into a voluntary foreclosure agreement with bank.
  • Increased the return on assets to the bank by approx. 400%
  • Newco stayed in building and is paying rent to the bank versus the building going dark
  • Saved 10 high-paying jobs in rural community
PROGRAM  
ASSESSMENT

1-day assessment showed that the customer base and sales revenue was not the core problem. The business has been systematically mismanged over the course of several years. The wober was a subject matter expert, but lacked the financial accumen necessary to run the business at the lebel it had reached. Further, it was determined by the bank that the assets would bring little on the open market. After legal costs and clean-up of the commercial propery it was likely the bank would net zero from the sale of the assets (1m+ loss). A determination was made that it was in the banks best interest to attempt business continuation and locate a sutable buyer.

PLANNIING

The plan was to peform "triage" moving very quickly to stabilize the business long enough to locate a suitable buyer.

EXECUTION

First step was to provide daily cash flow management of the business. Daily business decisions were processed through the lens of cash management. A narrative was assembled about the business and shopped to a network of TP360 investors. A preliminary investor group was assembled and letter of intent submitted and accepted by the bank. Subsequently, when the owner saw the success of our work, he was able to locate a second offer who ultimately made the purchase.


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